Kimberly White/Getty Images for Robinhood
- Robinhood CEO Vlad Tenev praised "diamond-handed" investors in an earnings call.
- Many users who gained direct access to IPOs held onto their stocks instead of flipping them.
- Robinhood's revenue more than doubled in the second quarter, but its shares fell 9% on Thursday.
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Robinhood CEO Vlad Tenev on Thursday praised retail investors who bought and held stocks rolled out to them via the trading app's direct access to IPOs feature.
Users have welcomed the chance to buy into upcoming IPOs, Tenev said during a call with investors after Robinhood reported second-quarter earnings on Wednesday.
"Customers that have been participating in these IPOs have been relatively diamond-handed, so to speak," Tenev said. "They've been holding on to these stocks for over 30 days and haven't been flipping them."
"Diamond-hands" is a term commonly used by Reddit's Wall Street Bets community that means an investor is holding onto a stock or cryptocurrency, regardless of the risks or headwinds involved. Conversely, an investor with "paper hands" is one who sells easily.
The IPO Access service, launched in May, enables Robinhood users to buy shares of companies at the IPO price, before the stock starts trading on the open market. IPO shares would otherwise typically go to institutions or wealthier investors.
Tenev said the fact that users have been holding onto their IPO stocks addresses misconceptions about retail investors. Traditionally, only professionals have had access to the IPO market, partly because retail investors were expected to snap up a hot new stock and sell it for a huge profit only hours or days later.
"We do expect to deliver more IPOs that customers can have access to as it becomes clearer to companies and issuers that this is a valuable constituency and invaluable to them as well," Tenev said.
The trading app's second-quarter revenue more than doubled to $565 million, up from $244 million a year ago, in line with the company's forecast of $546 million to $574 million. Cryptocurrencies accounted for 51% of all its transaction-based revenue, with dogecoin making up 62% of crypto revenue, it said.
Robinhood's shares fell 9% to about $45.41 a share at Thursday's market open.